Kenya Receives Credit Rating Upgrade From Global Agency
© AP Photo
Subscribe
Credit ratings provide investors, both individual and institutional, with information about an issuer's financial health and ability to repay their debts, helping them make informed decisions about investments in bonds, debt instruments, and fixed-income securities.
Moody's, a global credit rating agency, upgraded Kenya's outlook to "positive" from "negative," citing potential easing of liquidity risks and improved debt affordability.
"Given low inflation and a stable exchange rate, there is potential for further reductions in domestic borrowing costs as past monetary policy rate cuts pass through to lower long-term borrowing costs," Moody's said.
Moody's stated that a new IMF program would boost Kenya's external financing, while other creditors like the World Bank would remain important sources of funding. Despite this, Moody's affirmed Kenya's "Caa1" rating, citing ongoing high credit risks due to weak debt affordability and high financing needs.
Kenya has faced heavy debt and sought new financing since last year due to protests against tax hikes. However, domestic financing costs have begun to fall with monetary easing, which could continue if the government manages fiscal consolidation, potentially opening up external funding.
